Most homes that are bought and sold in the US are not brand
new, making this the most active segment of the
market.

"After beating expectations in September, October and
November, reality finally caught up with existing homes sales in
December," Svenja Gudell, Zillow chief economist, said
following the release of the report. "This monthly drop
cancelled out any momentum sales had picked up – making the
annual gain just shy of 1%."

"Housing affordability for both buying and renting
remains a pressing concern because of another year of
insufficient home construction," Lawrence
Yun, NAR chief economist, wrote in the report.

"Constrained inventory in many areas and climbing
rents, home prices and mortgage rates means it's not getting any
easier to be a first-time buyer," he continued. "It'll take more
entry-level supply, continued job gains and even stronger wage
growth for first-timers to make up a greater share of the
market."

"Overall, weaker sales are not driven by wavering
demand, another indicator that the reversal of the FHA premium
cuts would have done little to bolster homeownership. At this
point, lackluster inventory remains the number one driver of
sales and prices," Gudell added.